ESMA requires net short position holders to report positions of 0.1% and above

ESMA requires net short position holders to report positions of 0.1% and above13/04/2020

CONTEXT

The European Securities and Markets Authority ("ESMA") has considered that because of the exceptional circumstances linked to the ongoing COVID-19 pandemic, it was important to lower the reporting threshold as a precautionary action aimed at allowing authorities to monitor developments in markets.

DECISION

Therefore, ESMA has issued on 16 March 2020 a decision temporarily requiring the holders of net short positions in shares traded on a European Union (EU) regulated market to notify the relevant national competent authority if the position reaches or exceeds 0.1% of the issued share capital after the entry into force of the decision.

ESMA has considered that the current circumstances constitute a serious threat to market confidence in the EU, and that the proposed measure is appropriate and proportionate to address the current threat level to EU financial markets.

ENTRY INTO FORCE

The temporary transparency obligations applied immediately to any natural or legal person, irrespective of their country of residence as of 16 March 2020.

SITUATIONS IN EU COUNTRIES

Following ESMA decision published early next week, several regulators from other EU countries have taken corresponding ban decisions; in such a sense, Italian CONSOB has banned short-selling for three months, while Austria (FMA), Belgium (FSMA), France (AMF), Greece (HCMC) and Spain (CNMV) (for the time being), have introduced shorter bans.